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Three in five homeowners to use property wealth for later life expenses

Three in five homeowners to use property wealth for later life expenses
Shekina Tuahene
Written By:
Shekina Tuahene
Posted:
17/05/2024
Updated:
20/05/2024

Some 61% of homeowners in the UK will consider releasing money from their homes in later life to support themselves financially, data has shown.

The Home Advantage poll of 5,000 adults by the Equity Release Council (ERC) and supported by Equity Release Supermarket found this was higher than the 57% of people who had this intention in 2021. 

Among homeowners aged 55, 17% of respondents said paying for care at home was their main motivation for wanting to release equity from their homes. 

Some 16% said they wanted to boost their retirement income, while 15% sought to fund travel plans. 

There was also interest in supporting younger family members through gifting, as 14% cited gifting money to help relatives buy their first home as a reason to unlock property wealth. Some 13% said the money would go towards supporting their family with other financial needs. 

The ERC said that, with annual residential care costs now reaching around £46,000 in major cities according to research from Care UK, people were reluctant to go into a care home. 

Changing sentiment to borrowing in later life 

Attitudes towards having a mortgage in later life have shifted too, as 39% believe it is more common and 39% feel it is acceptable to do so, compared to 34% three years ago. 

Some 46% of respondents aged 55 and over said property wealth was a suitable way of meeting later life needs. There was more enthusiasm for this among younger respondents, as 75% of people polled under the age of 55 said they expected to rely on property wealth in later life. 

The research found that those aged between 35 and 44 had the biggest change in attitude since 2021, as 78% expected to release wealth from their homes later in life, compared to 67% who said the same previously. 

However, with longer mortgage terms that go into retirement becoming more prevalent, 26% said they did not expect to release money from their homes when they were older. 

A changing relationship with property wealth 

Jim Boyd, CEO of the ERC, said: “In an ideal world, most people would retire with a mortgage-free home and a substantial pension, but that is not the reality of modern Britain. People are choosing products such as ultra-long mortgages out of necessity, as the lower repayments allow them to purchase a home, save into their pensions and finance their day-to-day living expenses. 

“The rise of products such as ultra-long mortgages highlight[s] the changing relationship people have with property wealth, as it is increasingly being seen as an asset rather than simply bricks-and-mortar. Almost half of over-55s see property wealth as a means to meeting later life needs, and the younger generation is even more wedded to this approach. 

“We need to support people [to] look at all their options when it comes to funding retirement, whether it is pensions, property or investments. One size does not fit all. Encouraging people to have realistic conversations will provide more people with the type of retirement they want and need.” 

Mark Gregory, founder and CEO of Equity Release Supermarket, added: “Many factors dictate why people opt for equity release and changes in consumer behaviour tend to be reflective of the current market competitiveness. At one time, people thought their mortgages would run just for the mandated term, but changing attitudes and acceptance towards borrowing into retirement has created ongoing demand for these types of products.

“This coupled with a decline in pension provisions, savings and longer life expectancy has given rise to a need to borrow in later life as people look to redistribute their wealth to the younger generation, pay for care, replace their mortgage, or fund lifestyle goals. 

“The equity release sector has significantly evolved in line with these consumer demands and now encompasses far greater opportunities around later life living and finance. The beauty of the market today is that there are tools and platforms that exist, which help consumers to navigate these choices, enable them to review all options, view real-time rates and gain whole-of-market advice.”